Substantial write-off of £425m spent on Universal Credit IT “Highly likely” says today’s PAC report

The long awaited Parliamentary Public Accounts Committee report on the Universal Credit project has just been published.  It makes grim reading. “Value not secured on £425m spent so far” says the cross-bench committee of MPs which is chaired by Margaret Hodge MP.

The report appears to exonerate Secretary of State, Iain Duncan Smith.  It criticises DWP Permanent Secretary, Robert Devereaux, who was “only aware of a problem with the programme” after Minister Iain Duncan Smith commissioned a review.  The MPs’ personal criticism of the Permanent Secretary includes the observation that he was “unaware of difficulties because internal monitoring not working properly” and that his governance arrangements were “not remotely adequate” and that he provided “inadequate scrutiny and challenge”

The responsibilities of a Permanent Secretary to execute a policy are simply along the lines of “The buck stops here!“. The Permanent Secretary must take the rap for problems unless he seeks a Ministerial Direction. (See here for more on this: http://bit.ly/dwp-ministerial-direction-blog).

So what new do we find in the report? Much is a rehash of September’s National Audit Office’s detailed and withering criticism of the DWP’s execution of the Universal Credit Programme. On top of this are transcripts of the several hours of evidence taken in open committee. But there is some interesting analysis, especially regarding the inadequacy of the existing ‘Pathfinder’ pilots of the policy, which some media outlets have misleadingly called a ‘national roll-out’.

Margaret Hodge’s committee is in no doubt about the state of the little existing IT that actually is in use. The committee members personally visited Ashton-under-Lyne and saw Job Centre staff having to carry out manual calculations and retype data from one system into another.  Their conclusion is that the system that is live so far “cannot be scaled up for number & complexity of claimants ultimately needed” and that even DWP’s revised target of 184,000 claimants being on the system by April 2014 will now not be met. “Progress is significantly below target, at 2,500” they say.

It has emerged that DWP and the National Audit Office are at loggerheads on the matter of the real value of systems that have been built so far. The head of the NAO, Amyas Morse, stated that “We do not regard there to have been an adequate review” of the spend so far. The MPs’ report notes that “It is highly likely that a substantial part of the expenditure on IT development will have to be written off.”.  As I have previously noted, DWP’s Annual Report and Accounts are now seriously overdue. When these accounts are published we will not only see clearly how much of the £425m spend so far has been wasted, but DWP will have to come clean on the issue of the adequacy of its risk management systems.

The MPs note serious failings in internal controls.  An example is where a “personal assistant approved a £23m contract” when even the Programme Director only had £10m sign-off authority…

Other interesting items that are new from the report:

– DWP “gave misleading interviews to the press regarding progress (even) after it became aware of difficulties”.

– The revised business case is expected “hopefully this side of Christmas”, until then the benefits of Universal Credit are unclear.  This will include a revision of the £1.2bn reduction in fraud and error which originally rested on the installation of the scrapped security system (listen to the interview with  the anonymous whistle-blower here).

– A warning that DWP will either not test the system properly or delay all the more complex cases into 2017 thus hiding the full scale of the problem until as late as possible.

– Hodge’s committee recommends that Cabinet Office’s Major Project Authority (MPA) should intervene in failing projects in future.  Up until now the MPA has had only a monitoring role.  Intervention is the new watchword, confirm my contacts…

– The Pathfinder system “cannot handle claimant conditionality” which is a much vaunted aspect of the new policy (See more on that here: http://bit.ly/Claimant-Commitment-Example-Blog)

Finally, the report sums up, saying that DWP “does not know final cost of IT, expected savings, or when existing benefits will finally phased out”.

The revised business case is expected “hopefully this side of Christmas” according to the Cabinet Office.  We also await the publication of the much delayed annual report and accounts…

Update: November 7th, 2013: Computer Weekly claims that when the Universal Credit project got underway, DWP avoided scruitiny by arranging an opt-out of the otherwise ‘compulsory’ Integrated Assurance and Approvals Process (IAAP) that the Cabinet Office requires all large projects to comply with.

Update: November 7th, 2013: The DWP releases a typically chirpy press release saying that attempts to rebut the PAC report on 4 points. Firstly, repeating the claim that UC will ultimately bring a £38bn in economic benefits, despite agreeing with the Treasury that the existing business case is inadequate. Secondly, that a new leadership team is in place.  One thing that UC has not lacked is a continual churn of leadership. NAO noted that there have been five changes in 12 months. Thirdly, continuing to trumpet the very limited and compromised Pathfinder roll-out to a few meagre postcodes. And finally “We don’t recognise the write off figure quoted by the committee”, which is strange, since all the figures in  the PAC report are simply lifted from the NAO report which was agreed with DWP before publication (as NAO figures always are).
See https://www.gov.uk/government/news/public-accounts-committee-report-universal-credit-early-progress

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To read the PAC report on Universal Credit in full see here: Universal Credit – PAC Report November 7th 2013

To see a copy of DWP Permanent Secretary Robert Devereaux’s performance objectives for last year click here: Robert_Devereux-Objectives_2012-13-1